China Stock Watch 22/1/14

The big news today is of course the revelations (if something so unsurprising can be revelatory) of the offshore haven fortunes of China’s princelings and leaders. One of the main implications for business in China will be for facilitators such as PricewaterhouseCoopers, UBS and Credit Suisse etc. It will be difficult for any foreign company to work with them in China without the suspicion of corruption. Fallout for the tax-haven companies themselves won’t be such a problem; they are not there to conduct business after all, but to facilitate the smooth transfer of large amounts of capital from China to a safe place. It will be interesting to see if there are shareholder revolts for major companies caught up in the disclosures of offshore entities.

China-watcher Bill Bishop commented that the Chinese leadership will believe that “it is under attack from Western media“, after similar exposes of the fortunes of the family of Wen Jiabao and Xi Jinping. Perhaps so. They do provide an enormously satisfying target, in a country where they have a ruthless monopoly of power. Nonetheless, with power and prominence comes scrutiny, for which their behaviour suggests they are not prepared.

With the PBOC having provided fresh liquidity on Monday, stocks continued to rebound, with nineteen of the twenty blue chips finishing up on the day’s trading. SAIC Motor (up 3.23% to RMB13.09) and China Telecom (up 2.49% to HK$3.70) were the best performers, though a full fourteen out of twenty rose by over 1%. Only CNOOC fell, with yesterday’s disappointing news of missed targets still depressing investors; it closed down 1.99% to HK$12.82.

The Shanghai Composite finished at 2,051.75, up 43.44 (+2.16%). Increasing the (feeling of) wealth of ordinary Chinese is the only means of legitimacy the party has. This may mean that tough choices which reduce short-term growth in favour of restructuring will be delayed. More sabre-rattling in the South China Sea is another possibility for a pressurised leadership. Neither is encouraging for those who wish China well.

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.64 +0.03 (0.65%) 540,863.04M 7.03 4.05 CN¥0.62 7.54
PetroChina 7.7 +0.07 (0.92%) 1.41B 9.5 7.08 CN¥0.68 11.4
ICBC 3.43 +0.03 (0.88%) 1.21B 4.53 3.38 CN¥0.74 4.66
China Construction Bank 3.96 +0.04 (1.02%) 990,043.48M 5.19 3.8 CN¥0.85 4.68
Agricultural Bank 2.38 +0.01 (0.42%) 773,010.04M 3.28 2.35 CN¥0.50 4.74
Bank of China 2.51 +0.04 (1.62%) 701,205.02M 3.26 2.45 CN¥0.53 4.73
China Mobile 77.85* +0.70 (0.91%) 1.56B 89.2 74.9 HK$8.20 9.49
Noble Group 1.01 +0.01 (1.00%) 6,726.49M 1.27 0.785 SGD0.04 27.82
China State Construction 3.07 +0.07 (2.33%) 92,100.00M 4.18 2.9 CN¥0.62 4.98
CNOOC 12.82* -0.26 (-1.99%) 572,380.37M 16.52 12.04 HK$1.89 6.77
China Railway Construction 4.3 +0.10 (2.38%) 53,051.43M 6.25 3.95 CN¥0.84 5.11
China Railway Group 2.48 +0.06 (2.48%) 52,823.75M 3.36 2.3 CN¥0.44 5.66
SAIC Motor 13.09 +0.41 (3.23%) 144,324.67M 19 11.83 CN¥2.05 6.38
China Life Insurance 14.65 +0.35 (2.45%) 414,077.92M 22 12.88 CN¥0.97 15.16
Dongfeng Motor 11.70* +0.18 (1.56%) 100,808.60M 13.28 9.48 HK$1.38 8.49
China Shenhua 14.39 +0.24 (1.70%) 286,211.65M 25.28 13.97 CN¥2.25 6.39
Ping An Insurance 41.85 +0.50 (1.21%) 331,290.53M 53.27 31.69 CN¥3.45 12.13
China Telecom 3.70* +0.09 (2.49%) 299,449.77M 4.41 3.48 HK$0.26 14.31
China Communications Construction 3.89 +0.08 (2.10%) 62,919.72M 5.79 3.74 CN¥0.81 4.81
Bank of Communications 3.77 +0.04 (1.07%) 279,970.48M 5.68 3.65 CN¥0.84 4.47
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